Household Debt.ppt

Name NurShahirahBintiAzmanMatricNo EGA090051 DeterminantsOfHouseholdIndebtednessInMalaysia FactorsRolesofbankinginstitutionsinMalaysia hadreducedthecredittobusinessandfocusedmoreongivingcredittohouseholds GovernmentPolicy Promoteshomeownershippolicy NPLhomebuyerswithpropertiesbelowRM150 000higherthanthoseinhigherincome TheStar 2010 Reductionofdutiesoncars 23 oftotalhouseholdloansatendof2007 NorhanaandHua 2009 Implication CentralBankAnnualReport2009reportedthatthehouseholddebttoGDPratiohadbeenshotupto76 6percentfor2009whichisthehighestinAsia excludingJapan LocalpressreportedanotebyCIMBResearchdatedOct28statedthattheratioofhouseholddebttopersonaldisposalincomehit140 4 in2009whichwashigherthanSingapore105 3 andtheUS123 3 Thissituationshowedthatonaverage Malaysianhouseholddebtisgreaterthantheirincome Kee 2010 reportedthatstudiescarriedoutintheadvancedeconomieshaveshownahigherratioofhouseholddebttodisposableincomeisakeydeterminantoffinancialdistress Giventherisingtrendinthehouseholddebt morehouseholdsaregettingintodebtsituationasaresultofhigherspendinglevels AKPKrecordedfrom50 361casesthatenrolledindebtmanagementprogram 10 6percenthouseholdscouldnotpaytheircreditcarddebtwhiletheremaining74 3percenthadrepaymentproblemwithhousingloans carloansandcreditcardsoutstanding DepartmentofInsolvencyMalaysia MDL reportedthatthisagencyhadrestructured80 348bankruptcycasesfrom2005toMay2010 MDLalsolistedsomeofcasesinvolvedindifferenttypeofloansthatcausedthebankruptcywhichare9 464casesforfailingtosettlepersonalloans 6 022casesforfailingtosettlehousingloansand4 417casesforfailingtosettlecreditcarddebts StatementofResearchProblem Individualengageswithdebtformanydifferentreasons Someusecreditcardbecausewethinkinthismodernworldcreditcardisamustsincewedon thaveenoughincometosupportallofourdailyconsumptionregardlessitisnecessaryornotthusindividualmaypossessmorethanonecreditcard Loansarealsoimportanttosupportmanythingsinourlifesuchasmedicalcost educationandbuyingcarandhousesothissituationmadeusseemscannotescapeourselffromdebt Acreditcardisactuallyseenasastatussymbol wherethemorecredityouhavethehigheryourpositiononthesocioeconomicladder Mostpeoplepayofftheentirebalanceeachmonthanddonotpayanyinterestontheirpurchases Itiscommontopayforprettymucheverythingincludinggrocerieswithacreditcardinordertomaximizetherewards andthenpayoffthefullbalance TheseraisequestionsonwhataredeterminantsofhouseholdindebtednessfromthemicroperspectivesinMalaysiaandwhatkindofpolicyrecommendationthatisneededtohelpcurbthisproblem ObjectiveoftheStudy GeneralObjective Thisstudywillexaminetherelationshipbetweeneconomic socio demographicandpsychologicalfactorsandhouseholdindebtedness SpecificObjective Tostudywhatareeconomicdeterminantofhouseholdindebtedness Toexaminehouseholdsocio demographicthatdetermineshouseholdindebtedness Toexplorehowpsychologicalfactorsdetermineshouseholdsindebtednesssuchaslocusofcontrolandaspirations LiteratureReview Householdsindebtedness EconomicfactorsandindebtednessLuntandLivingstone 1991 LivingstoneandLunt 1992 Socio demographicfactorsLeggeandHeynes 2009 LivingstoneandLunt 1992 CoxandJappelli 1993 PsychologicalfactorsLocusofcontrol LeggeandHeynes 2009 LuntandLivingstone 1991 LivingstoneandLunt 1992 Aspiration LeggeandHeynes 2009 Karlsonetal 2004 LivingstoneandLunt 1992 StatementOfHypothesisWhendisposableincomeishigh debtwillincrease Accordingtotheorywhendisposableincomeishigh thepropositionofincomespendbyhouseholdswillincreasewhilethepropositiontosaveisdecreasethusthismayleadhouseholdsdoborrowingiftheirincomecannotsupporttheirconsumption Thereissignificantrelationshipbetweenhouseholdindebtednessandage highlevelofeducation bigfamilysizeandmaritalstatus Thereisanindirectrelationshipbetweenhouseholdindebtednessandtheirlocusofcontrolandaspirationleveltobeindebtedness ConceptualFramework Householdindebtedness Economicfactors income consumption saving Psychologicalfactors locusofcontrol aspiration Socio demographicfactors age gender religion ethnicity occupation maritalstatus education A3 Figure1 Hypothesisstructuralmodelforeconomic socio demographicandpsychologicalfactorsonhouseholds indebtedness A1 A2 EmpiricalMethods PrimarydatawillbeuseinthisstudyandanalysiswillbedonebyusingAMOSsoftware AsurveywillbeconductedandwilladoptconveniencesamplingofworkinghouseholdsinKualaLumpurandsampletargetare200people Theliteraturereviewwillbeusedasthebasisfordesigningquestionsthatcollectshouseholds financialinformation incomepermonth incomefutureexpectation amountofpersonalunsecureddebt creditcardpossession repaymentamountsonloans percentagehouseholdincomeusedtopaybackloanspermonth reasonsforborrowingandhouseholdssavingbehavior Forsocio demographicinformationrespondentsareaskquestionssuchastheiryearofbirth gender religion headofhouseholdworkingstatus householdsize numberofworkinghousehold numberofchildren andnumberofmemberhouseholdthatlessthan18yearsold headofhouseholdgender maritalstatus ethnicityandheadofhousehold seducationlevel Analysisforsociodemographicpartwillusedescriptivestatistics Asfortheinformationonpsychologicalfactors householdswillbeaskeda5 pointLikertscalerangingfrom1 never to5 often questionsonindividualperspectiveofwhethertheyareabletocontroltheirfate Foraspirationfactor householdswillbeaskingquestionsontheirfinancialperceptioncomparetoothers friends colleague familymembers neighbors others andrateon6 pointscalerangingfrom1 Mypositionworsethanothersandthismademeworry to6 Idon tmindaboutmyfinancialpositioncomparetoothers Sincelocusofcontrolandaspirationfactorarelatentvariables Questionswillbeasktocaptureifhouseholdshavethesefactorsthatcangiveimpacttodebt Confirmatoryfactoranalysis CFA Hypothesisstructuralmodelforeconomic socio demographicandpsychologicalfactorsonhouseholds indebtedness References BankruptcystatisticsbasedoncreditcarddebtsinMalaysia 2010 Retrieved27January 2011 frommalaysia Bernhardt D MoneyandLoans TheReviewofEconomicStudies 56 1 89 100 1989 Cox D Jappelli J Theeffectofborrowingconstraintsonconsumerliabilities JournalofMoney Credit andBanking 25 2 197 213 1993 Dzulkefly A 2010 Breakingviewsofpropertyoverhangandmountinghouseholddebt Retrieved27January 2011 Karlsson N Dellgran P Klingander B Garling T Householdconsumption Influenceofaspirationlevel socialcomparison andmoneymanagement JournalofEconomicPsychology 25 6 753 769 2004 Katona G Psychologyandconsumereconomics TheJournalofConsumerResearch 1 1 1 8 1974 Kee C E 2011 Householddebt Redflagsahead Retrieved27January 2011 fromNewZealandfamilies SocialPolicyJournalofNewZealand 35 27 42 2009 Livingstone S M Lunt P K Predictingpersonaldebtanddebtrepayment Psychological socialandeconomicdeterminants JournalofEconomicPsychology 13 1 111 134 1992 Lunt P K Livingstone S M Psychological socialandeconomicdeterminantsofsaving Comparingrecurrentandtotalsavings JournalofEconomicPsychology 12 4 621 641 1991 Norhana E andHua T G 2009 HouseholddebtinMal